Turn on any financial talk show and you will be deluged with advice about how to make more money. You’ll learn which kind of IRA is best for you, and hear arguments rage about the pros and cons of no-load mutual funds. This is useful information, but it doesn’t go far enough. Given the central, powerful role of money and business in both our society and our personal lives, it is astonishing that so little attention is given to the social, ethical, and spiritual dimensions of money. Even the most caring commentators seem oblivious to the enormous impact our financial decisions have on communities, the earth, and our own peace of mind. We’ve ignored the fact that our money carries our voice to the world.

Investing with Your Values:
Making Money and
Making a Difference

by Hal Brill, Jack A. Brill,
and Cliff Feigenbaum
Bloomberg Press,
1999, 363 pages

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When we set out to write Investing with Your Values, we looked at questions that are fundamental to healing our relationship with money. How can people include their spiritual, social, environmental, and ethical values when making important financial decisions? Why do so many conscientious, good-hearted people make investments that conflict with their own deeply held beliefs? There are of course no easy answers. We have found that the status quo — in which money and values are separated by an impenetrable wall — is rooted in an outdated mechanical worldview that sees everything as part of a giant machine. When we shift toward a natural worldview, recognizing that the world is composed of interrelated living systems, a new sort of investing emerges: Natural Investing.

Natural Investors are shunning conventional wisdom that says we must abandon ethics when making financial decisions. People of all income levels, from across the entire political spectrum, are using the tools of Natural Investing to find profitable investments. According to the Social Investment Forum, well over a trillion dollars is invested today using some sort of ethical criteria; this represents almost one-tenth of all investment dollars. Nearly every mainstream investment option now has a values-based equivalent. You don’t need a lot of money — several screened mutual funds and community banking options welcome small investors who can start with as little as $50. All that’s really needed is the willingness to identify and consider your personal values when making decisions about your money.

Not Just for Longhairs

Many people shy away from socially conscious investing because of the following two myths.

Myth One: Limiting one’s investment choices by using social, environmental, or ethical criteria results in lower financial returns.

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The Facts: It is true that Natural Investors voluntarily limit their choices, but this has not led to any systematic under-performance in the universe of stocks typically chosen by Natural Investors. In fact, solid statistical evidence shows that investments chosen with social, environmental, or ethical criteria perform as well as or better than those chosen with financial criteria alone. For example, the Domini 400 Social Index includes socially screened companies in a similar range of sizes and industries to the unscreened Standard and Poor’s 500. From its inception in 1990 through December 1998, the Domini 400 has outpaced the S&P 500 with a total return of 442 percent compared with the S&P’s 366 percent. This is a truly remarkable feat, but it is only one of many examples that show a positive correlation between corporate responsibility and corporate profitability. So much for the myth that “good guys finish last.”

Myth Two: Natural Investing is only for tree-hugging radicals and aging hippies.

The Facts: Natural Investing in the United States traces its origins to Quakers and other Christians who could not live with the inconsistencies between their beliefs and their investments. Today a diverse range of strategies are available to support investors with wide-ranging values, from conservative Christians to farm-belt traditionalists to environmental visionaries. Most screened mutual funds aim at a broad cross section of common interests. Natural Investors are not anti-business, nor are they dabbling in collections of fringe companies. For example, the Domini 400 includes many household names, including Home Depot, Xerox, Johnson & Johnson, Coca-Cola, and Bank of America. Although none of these companies is free of controversy, each has particular strengths that led to its inclusion in the index.

Have It Your Way

Natural Investing enables you to bring your particular social, environmental, or ethical concerns to the money table. Although most Natural Investors grapple with mainstream topics like corporate responsibility and workplace conditions, your investments can be customized to focus on a nearly unlimited array of issues. A full range of financial objectives can be met with Natural Investing, using everything from conservative, government-guaranteed bank programs through socially screened mutual funds to high-risk venture capital.

Natural Investors use four major strategies to bring their values into the financial world:

1. Avoidance screening is the familiar method of choosing not to invest in industries by which you do not wish to profit; tobacco, weapons, and environmental polluters are some of the many commonly-used screens. For example, Philip Morris wouldn’t get through an investor’s “no tobacco products” avoidance screen.

2. Affirmative screening, which we also call “prospecting,” is where investors actively seek out investments in activities that they do want to support, bringing their vision of a positive future into the world. This can focus on leading-edge companies in emerging fields like alternative energy and natural foods, or it may include investments in large companies that are addressing the concerns of investors. Many prospectors buy stock in companies that demonstrate a high level of commitment to their workers, their communities, or the environment.

3. Community investing, a rapidly emerging branch of Natural Investing, is especially useful for getting your money into the hands of grassroots programs and economically marginalized people, locally or globally. Community investing initiatives include affordable housing, small business lending, targeted investment in both urban and rural areas of the country, and micro-enterprise development throughout the world. It is an excellent way to put your savings to work and provide a “hand up” to those who need access to capital.

4. Shareholder activism is a potent strategy that provides a means for changing companies from the inside. Shareholder activists have a wide range of tools available to them, including dialogue with companies on issues of concern and sponsorship of shareholder resolutions when companies refuse to talk or when the dialogue breaks down. These methods achieved stunning results in the campaign to end apartheid in South Africa and are now being applied to a wide range of foreign and domestic concerns such as sweatshops and excessive executive pay.

Step Right Up

The world today reflects the unnatural separation of money and values. The United States is the richest country ever, and material progress has brought immeasurable benefits to many. But the pursuit of wealth-at-any-cost is also responsible for human suffering, gross inequities in the distribution of this wealth, and environmental devastation. Our global economy is the central nexus of human activity on the planet; its influence radiates into every sphere of hum
an endeavor. If we are to fulfill humanity’s potential as stewards of a healthy, prosperous planet, each of us must connect with the seeds of our own natural desires and plant them smack dab in the middle of Wall Street and our entire economic system. As we learn to make money and make a difference, we are bringing essential human values back into the core of our society.

Start with these seven steps:

1. Financial checkup. Review your current financial situation and design a financial plan that will help you achieve your goals in life.

2. Values check-in. Clarify your personal values and define how you want to relate to the social, environmental, and ethical issues of our times.

3. Choose which of the Natural Investing strategies you want to use — avoidance screening, affirmative screening, community investing, and/or shareholder activism.

4. Design your Natural Portfolio. Select specific investments that will enable you to both make money and make a difference.

5. Change your life. Review your spending patterns and work situation in light of your values; make adjustments such as reducing consumption, creating your right livelihood, and supporting causes that you believe in.

6. Change your community. Bring Natural Investing into your community through supporting initiatives that strengthen local economies.

7. Change the Economic System. Become a player in redesigning the global economic and political system so that it better reflects humane and sustainable values.

To dig deeper, read our book or visit http://www.naturalinvesting.com.

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